Car dealers: Start doing your homework because it's not a matter of "if" but "when" the retail model changes.
That was the message of the three Evolution Revolution panelists at the Automotive News Retail Forum: NADA on Thursday.
"Dealers have to innovate and adapt," said Sam Slaughter, owner of Sellers Auto Group in suburban Detroit. He quoted studies that estimate by 2040 about 53 percent of miles will be driven autonomously, which will mean, "We're transportation consultants. We aren't just pushing metal anymore. We have to think about pushing miles."
Ron Frey, chief strategy officer at dealership software giant CDK Global Inc., said learning now the future needs of consumers is critical to adaptation.
"Data matters a lot," said Frey. "We have to pay attention to it and not just what comes out of the [dealership management system]."
Frey said dealers must analyze the entire consumer experience and study analytics related to it. For example, he suggested dealers find ways to deliver digital purchases more seamlessly and consider offering subscription programs that would allow consumers to alternate the vehicles they drive based on their needs or desires.
Warren Henry Auto Group, in Miami, has offered a subscription program for about four months, said CFO Erik Day.
The program, which he said his customers are excited about, aligns with the group's idea of creating a "customer-centric model." Day urged dealers to look outside the car industry for inspiration. He cited Amazon as an example of customer-centric service because it lets consumers make fast, easy purchases, then delivers the goods to their doorstep.
"We owe it to ourselves to create the ecosystem that drives this seamless service," said Day. "That's why we're really obsessed with data."
Day said Warren Henry has its own data scientist through a partnership it formed with the University of Miami's data science program. The group also started an engineering lab to study all data on customer service and needs.
"Data is an asset," said Day. "It'll only get more complicated as cars become more connected: Who owns the data? Where is it? How do we deal with privacy, yet have seamless integration? That'll be critical to delivering the customer experience."
Also, from a security standpoint, Day said, dealers need to prepare to protect data in the future given expanded car connectivity.
"I would encourage everyone to focus on this today," said Day.
Warren Henry Auto also looks outside the industry for talent that will bring new thinking and innovation. It has a policy of not hiring anyone who has been in the auto business.
"We bring them in fresh and teach them," said Day. "You've got to invest in ongoing training."
The panelists did concede that, with some 260 million vehicles on the road, any switch to self-driving cars, widespread subscription models and a drift from personal car ownership to other models remains many years away.
But a more immediate challenge that dealers should address is offering a fully digital vehicle purchase.
"It's ridiculous that you can DocuSign to buy a home," said Slaughter, "but you can't do it for a car."
Frey added, "We need to ask why we haven't solved that yet?"
